Supply Chain Management

What is Supply Chain Management?

This module introduces viewers to the field of supply chain management. It describes the complex supply chain of a simple product, a bottle of water. The video also illustrates the importance of supply chain managers and their skill sets in our modern global economy for both manufacturing and service industries. In defining supply chain management, the video also hopes to educate and inspire business students, young and old, about the opportunities available to those with supply chain management degrees.

This is the first installment in Arizona State University's twelve-part introduction to supply chain management video series. ASU, the W. P. Carey School of Business, and the Supply Chain Management Department are proud and happy to share this video series with supply chain management departments, supply chain instructors, career specialists in high schools and universities, as well as industry leaders in an effort to inspire a new generation of supply chain management professionals across the country and around the world.

Supply Chain Integration

Individually, purchasing, operations, and logistics management do not comprise supply chain management. Supply chain management requires network integration. Integration is only possible when organizational philosophies are compatible across the supply chain and when supply chain partners work as cooperative and coordinated teams. Modern organizational supply chain leaders need to understand the importance of integration internally and externally. Modern supply chain skills are required by elite corporate executives around the world.

Real-World Supply Chain Applications with Huge Impact:

1.Supply Chain Management in the Health Care Industry:

"A Holistic Supply Chain Scenario Management Solution at McKesson”: McKesson is the world's largest healthcare services company, with annual revenues over $120 billion. The Pharmaceutical Supply Division is the largest division of McKesson, with revenues of over $97 billion a year. The Pharmaceutical Supply Division is at the center of the Pharmaceutical supply chain, serving all pharmaceutical manufacturers and over 25,000 pharmacies, hospitals, and clinics.

2.Supply Chain in the Energy Industry:

“Chevron Uses “Petro” to Optimally Grease Its Supply Chain”: As one of the world's leading integrated energy companies, Chevron is involved in virtually every facet of the energy industry. Crude oil goes into Chevron refineries, where it is made into a spectrum of products ranging from fuels (gasoline, jet, and diesel) to base oils (lubricants) to specialty products (additives). To produce these products efficiently, thousands of factors across the supply chain need to be considered.

3.Supply Chain Management in the Manufacturing Industry:

“Optimizing Purchasing at Procter & Gamble”: Procter & Gamble (P&G), the consumer products giant, seeks to operate a “consumer-driven supply network.” But the complexity inherent in sourcing materials for a global business with nearly 300 brands produced by over 100,000 people and thousands of suppliers in nearly 80 countries for millions of consumers was creating costly inefficiencies. P&G’s sourcing managers created groups of products for suppliers to bid on, limiting the amount and type of input suppliers could provide in a sourcing event. The effect was forcing suppliers to squeeze their margins instead of enabling them to bid competitively with their own cost efficiencies. In addition, the system made it difficult for P&G to balance price considerations with such “side constraints” as product quality, supplier reliability and delivery schedules.

4.Supply Chain Management in the Steel Industry:

"Operations Research Transforms Baosteel's Operations": Shanghai Baoshan Iron and Steel Complex (Baosteel) is China’s largest and the world’s third-largest steel company.In 2005, our research team was tasked with developing advanced operations research-based planning tools to improve the operational efficiency of Baosteel’s Shanghai plant. In the following six years, we developed novel optimization algorithms and tailored metaheuristics, and implemented four decision support systems. (DSSs) to replace the manual planning methods at the Shanghai plant. The DSSs have brought scientific operations management to Baosteel and transformed the plant’s production and final-product delivery operations. Baosteel estimates that from 2007 to 2012, they provided a cumulative economic benefit of $77 million. Based on their current usage at this plant, they also estimate that these DSSs will continue to provide an annual economic benefit of $20 million, which represents a 17 percent improvement of Baosteel’s information technology and operations management capability. They have also reduced Baosteel’s carbon dioxide emissions by 585,770 tons annually.